Minister for Foreign Affairs Dr Vivian Balakrishnan's Remarks at the Opening Panel at the 2025 Bloomberg New Economy Forum with Bloomberg's Stephanie Flanders, 19 November 2025

Stephanie Flanders: Welcome and thank you. I hope you appreciate that you are the only one who gets the personal introduction from Mike.

Minister: Well, so did you. I think he has raised expectations too high.

Stephanie Flanders: Appropriately high, I think, given our previous conversation. We have heard you on this stage before and elsewhere. I surprised you earlier because I said I wanted to start with some good news, and you looked at me and said, “there is good news?” But Singapore has been a part of that. There is so much that has happened. We are going to talk about some of the themes that have been raised, even in the introductory film. A lot of surprises, a lot of bad surprises this year, or challenges that businesses and governments have had to deal with.

But one thing that has not happened – given the dominant narrative at the beginning of the year – that we might well have expected to happen, is that we have not ended up with a global retaliatory trade war. The US has taken the path of protectionism, as we would have expected a year ago with the re-election of Donald Trump. But with the exception of China, as a group, the vast majority of America's trading partners faced with these big tariffs did not retaliate and decided they would just pay this higher price for entry into the US economy and meanwhile, to get on with doing a bit more liberalisation. Singapore has been part of forging new active relations, trade deals and encouraging closer integration of the world minus the US. I wanted to ask you a bit about that. Do you think that can offset what has happened to the trading system this year?

Minister: I am reminded of a quote attributed to Ernest Hemingway. How did you go bankrupt? Two ways: gradually, and then suddenly. So hold that thought in mind.

This year has been the year of sudden changes, but actually, the gradual changes and the pressure has been building up for a long time. The first point I want to leave with you is: the role of the United States for the last eight decades is historically unprecedented. The ultimate winner of the Second World War, 40% of global GDP – that was its share of global GDP – decided that instead of conquering and eliminating the vanquished, to rebuild Germany and Europe through the Marshall Plan, as well as Japan. It set a rules-based globalisation, with economic integration at the core. This was highly unusual and unprecedented. That is the first point – it is about the US.

The second point is that the pressures on the US to give up on this have been building up for a long time. If you think about it, what the US did for eight decades was to provide first, the market; second, technology; third, capital; and rules-based economic integration. The first beneficiary of this apart from Europe, was Japan. Then you had the Asian Tigers — Hong Kong, Korea, Singapore — and then the rest of Southeast Asia. But the real winner of rules-based free trade has actually been China. The US is only 249 years old and it has never met a peer competitor with the scale, the ability and the willingness to reorder the world in a way that is favorable to it. The point is that China, if you look at its per capita GDP, is still a middle-income country, and China is not able or willing to replace the US as the underwriter of globalisation. We are, to quote my Prime Minister, in an interregnum — a state of messy transition – from a world in which there was an underwriter and enforcer. That underwriter and enforcer has now decided to become ‘disruptor-in-chief’ for domestic political reasons because after eight decades of providing capital, technology, and markets, what the American middle class is seeing is deindustrialisation, rust belts, hopelessness, and middle-income stagnation. And guess what – elections are local, so it is a completely legitimate question for the American voter to ask why America should underwrite, in blood and treasure, a system that seems to have benefitted the rest of the world, especially a major peer competitor.

I think we need to pull back. You see my point about “gradually, and then suddenly”. We just so happen to be witnessing something like an iceberg or a continental ice shelf falling — but actually the climate warming predated that. What we are witnessing today is not a change of weather. It is not the storm that delayed Mike [Bloomberg] yesterday. This is real climate change, geopolitical climate change.

Stephanie Flanders: We will go back to the trade piece in a second. Following on from what you said, it is historically unprecedented also to have a single global superpower almost voluntarily step back from a lot of its obligations — not be forced to do so, not lose a war, but just decide, “I don’t want to do this anymore.”

Minister: Yes, but it was unusual to have such a benign hegemon in the first place. For us now to say: “Where did that hegemon go?” — my point is that if you take a longer view of history and geopolitics, this was a unique period. I have tried to look back and I cannot find another period in history when we had such a benign hegemon.

Stephanie Flanders: When you think back just a few years ago, we would have been on this stage talking about decoupling. That might be the climactic change to distinguish from the change in the weather as you said. But with the Biden Administration, for many of the US allies, it felt like it was asking countries to choose between the US and China. This was obviously challenging, nowhere more so than here. President Trump has had a much less consistent, certainly more free-wheeling, unilateralist approach. It feels like the world is  less divided between the US and China, and more the US and the rest of the world left in a mess. Is that easier or harder?

Minister: First of all, the American Ambassador is here, so I am not here to be an apologist. But I would say that President Trump, as a person, has in fact been uniquely consistent for decades. What do I mean? If you look at his record of what he has said – watch the interview with Oprah Winfrey back in 1988 – his views on war (anti-war), his views on free trade (that it is as an avenue for America to be taken advantage of), his views on business (in a Main Street, real-estate way as opposed to Wall Street and financial engineering), and his views on immigration, have all been remarkably consistent. I think people do not give enough marks for that. He is consistent. It is just that his methodology and presentation are somewhat novel, and people react to that. My point is, American policy under President Trump is in fact reflecting long-held, deep convictions.

Stephanie Flanders: I think you are right. I guess the exception to that — and I am interested in whether you read it the same way — is: Mike mentioned you being at the recent meetings with your Prime Minister in Malaysia and Korea, where we did see this deal, this rapprochement, between the US and China. But it would not have been lost on many of the people around the table that China was ending up with a relatively better position than many of the other countries in the region that had thought they were going to be an alternative to China for US manufacturers. That feels a little inconsistent with wanting to wean American industry off Chinese production.

Minister: Again I would distinguish between strategic and tactical. I think what we have witnessed so far is a tactical pause. The fundamental problem between the US and China is an almost complete lack of strategic trust. That means each side has to assume the worst of each other. Even if you take precautions, it is viewed as escalatory. Both sides have identified pain points, and what you have seen so far is not a strategic realignment or a sudden dawn of strategic trust. It is that both sides have decided they need time, they need a tactical pause, whilst they get on with the real business.

The point about decoupling is worth unpacking. What we are witnessing in the world right now is a couple of phenomena. Number one, you have witnessed the weaponisation of everything: weaponisation of the dollar, weaponisation of finance, weaponisation of critical minerals, global supply chains. Interdependency used to be a good thing; now it is a vulnerability. Newton's third law applies in diplomacy too — for every action, there is an equal and opposite reaction. The weaponisation of everything has led to an erosion of trust, a need to assume the worst and prepare for it, and in the absence of trust, it is very hard to have strategic alignment. What you are witnessing now is a tactical pause; the strategic problem remains.

The next aspect is the fracturing of supply chains. It is not an ideological point. Especially during COVID, you found that even simple things like making a mask — which is not rocket science — that the essential components were not within reach, and everyone was panicking and you did not have access to it. The fracturing of supply chains in the name of national security and in search of resilience means a world that was hitherto based on efficiency is now building supply chains on the basis of near-shoring, onshoring and friend-shoring. Economically, what that must mean is some inflation. You are no longer choosing the cheapest and the most efficient; you now have other considerations. Watch that bout of inflation.

The third point is the global commons. You saw the opening video, and I have been involved in this game long enough to give an example of the Paris Agreement. The only reason that got done is because America and China were on the same side and were able to drag the rest of us. An imperfect but important agreement. Today, the two main players are not in the same room, and it goes further than that. It is not just a matter of picking up your marbles and leaving the game, but actually disrupting the game. My worry is that we will be unable to deal with the global commons: climate change, pandemics, and the challenges from AI. We will not be able to respond adequately to it because the two key players either are disrupting actively or spoiling for a fight and are certainly not willing to restrain themselves with multilateral rules imposed by Lilliputian countries, medium and small elsewhere. I hope that is not too depressing.

Stephanie Flanders: I was saying at the beginning, it just seems a muddier picture than simple decoupling. It is “Team US”. But as far as you are concerned on the long-term trend — someone has likened it to a couple saying: “We’re going to divorce in ten years, but we still have to live together until then” – do you still think the long-term trend is decoupling between the US and China?

Minister: I think that without strategic trust, the logic for decoupling — at least partially, in the name of national security and anxiety over competitiveness — will continue to play out. That is what we are witnessing.

But to come back to where you started, with a piece of good news: why has the rest of the world not retaliated? I think there are a couple of reasons.

Number one, they are a far bigger elephant, or eagle, than the rest of us. What is the point of retaliating when, in fact, the little guy will be the ultimate loser? That is the first thing.

Second — and I am coming to your good news —  if you leave aside the two big powers, open a world atlas and draw a diagonal from Europe through the Middle East, South Asia, Southeast Asia, Australia, New Zealand, and then draw two spokes; one to Northeast Asia, in particular Japan and Korea; and another southwest to Africa and South America, guess what? There is still a majority of countries, and I would even say a majority of global GDP, that still wants to operate on supply-chain efficiencies, on economic integration, on rules-based globalisation. The only thing is the enforcer-in-chief is no longer there. There is a need therefore to assemble a coalition of the willing. What you are watching now, all that scurrying around by medium and small economies, is to keep globalisation alive, reform what needs to be reformed (and there is a lot that needs reform), and to work together in a more collegiate way, knowing full well that the underwriter and enforcer is not going to be doing the heavy lifting.

That is where I think there is a glimmer of hope, and that is why my Prime Minister and I have been scurrying around to regional and international conferences. The good news – I agree with you – is that the majority of people want some order, some stability, and some economic benefits from working together, from interoperating. What we are hoping, ultimately, is that when things settle down between the two big boys, they will then rediscover the benefits of globalisation.

Stephanie Flanders:One of the initiatives that you had in the summer was that with the Gulf and the Gulf Cooperation Council (GCC). Do you see that moving forward?

Minister: If you look earlier this year when we had an ASEAN Summit, we included the GCC and China. For Singapore, we are members of both the CPTPP and RCEP, which are big, mega free trade deals. We are trying to convince the European Union, which is also a reflexively pro-trade, pro-rules entity.

Stephanie Flanders: Are they going to join?

Minister: I think that is a bridge too far. But can we get a partnership between the European Union and the CPTPP, especially a CPTPP which is expanding?

Stephanie Flanders: You have got to think of a better name.

Minister: I know, I know.

Stephanie Flanders: I think that is why no one talks about it, honestly.

Minister: I know. But strip aside the labels and the names, is there benefit from globalisation, from efficiency, from interoperability, from standards, from peaceful resolution of disputes, including trade disputes? The answer is unequivocally yes. We need to do it now, and everyone needs to chip in.

I think the EU is a natural partner with the CPTPP. Think of the EU and the Pacific. Can we construct something that cuts a diagonal across the globe? Is Africa keen on this? I think they are. And South America – you may be surprised, even little Singapore has signed free trade deals with Mercosur, which is Argentina, Brazil, Paraguay and Uruguay. We have even signed a free trade agreement with the Pacific Alliance – Mexico, Colombia, Chile. You would be surprised - the appetite for economic integration remains, and that is what Singapore is working on now.

Now of course, we are biased. This is Manhattan without upstate New York. This is one fifth of Rhode Island without continental United States. Or, if you want another uncomfortable analogy, Singapore is just twice the size of Gaza, but with three times the population. We are a tiny place in which our trade volume is three times our GDP. I hope you understand when we promote free trade, it is life blood. It is not a negotiating point. And also when we say rules are better than the alternative, because the alternative is ‘might is right’, ‘big is beautiful, and small is irrelevant’. So I will confess this is a self-interested argument.

Stephanie Flanders: You talked about the importance of rules, but also of countries working together even without the enforcer. Should the Southeast Asian economies, even the ASEAN countries, have worked together more in negotiating these trade deals with the US. You described this as bilateral arm wrestling.

Minister: No, I do no think that was necessary. Certainly not at this stage. If you look at ASEAN as a whole, the tariffs range from 10%, 19% maybe 20%, and those numbers keep changing anyway. My point is, do not overreact to the headline of the day. Understand what is going on. If you now bring your zoom lens to ASEAN, have we systematically brought down our trade barriers and non-tariff barriers? Is ASEAN fulfilling its mission of becoming a single production zone, a single investment zone? Has there been economic growth in ASEAN? What are the prospects for ASEAN in the next two decades? We think we can double our combined GDP. If you add up the combined GDP of ASEAN, which has a population slightly larger than the EU, we are about number five. And because half our population is below the age of 35 and our middle class is growing, the long-term prospects are bright so long as we do not overreact and do not do stuff that actually boomerangs back on us. Just look at what we did this year. We upgraded the ASEAN Trade in Goods Agreement (ATIGA) within ASEAN, we upgraded the ASEAN-China Free Trade Agreement, and we are still looking at building more bridges across the world. Southeast Asia is a zone of hope and growth. The key thing is to focus on the long term. What does the long term mean? It means technology, bearing in mind that we have got three technological revolutions going on in real time simultaneously: AI, biotech, and renewable energy. We are focusing on building up the infrastructure for that, focusing on educating a workforce to be work-ready for that kind of world – a world of AI and robotics. We are focusing on integrating. We can still increase our intra-ASEAN trade significantly. And what about ASEAN-Africa? ASEAN-South America? Some people call it South-South – I do not really like the term but my point is, there is still a majority in favour of this.

I would also point out that the CPTPP began as four tiny states: Singapore, Brunei, New Zealand and Chile. It only became the TPP when America and Japan came in. We knew by the time Hillary Clinton had to withdraw her support from the TPP, which she in fact had a lot to do with starting, that the cause of free trade was in political problem. I think all of us in this room, who I would say are probably instinctive ‘free-traders’, need to realise that we did not make the political case for it. You have to convince your local electorate that jobs and wages and opportunity come from free trade. Otherwise, if you do not understand the political reality that for every free trade agreement there are winners and losers, you need to put seatbelts on, you need to have compensatory mechanisms. Whilst you do not expect governments to choose winners and losers at the enterprise-level, governments do need to be activists. Infrastructure, education, pro-enterprise regulatory environments – you do need an active government. What you do not want is completely state-directed capitalism where you pick winners and losers. We think that is ultimately a dead end. My point is, watch this space. That is why there is still buzz in this part of the world.

Stephanie Flanders: I started talking about the US. You have said, obviously, trade is the lifeblood of Singapore, and you are absolutely at the center. The one country that, despite all these tariffs and trade wars by the US, that has managed to increase its export growth this year is China. You see that country, in many ways, doubling down on a focus on manufacturing, on export-led growth, when many economists might have said that long-term, they have to be on a different path. How destabilising is that for this region, especially now?

Minister: You are being too delicate. You are referring to over-capacity. The world has had unsustainable imbalances for some time. If you outsource all manufacturing to China, you outsource all energy to Russia, and you outsource security to America – I am referring to the EU – that is not a sustainable model. If the EU wants to have strategic autonomy or independence, it needs to get a grip on manufacturing, on its industrial capacity, on its defence and on its energy policies. I am giving you just one example.

In the case of China, China became the manufacturing center of the world and enjoyed economies of scale – and I must say Chinese workers happen to be really hard working and efficient. I do not think you can fault China for that. But in a world in which all manufacturing is accumulating on one half, trade surpluses are accumulating there and being recycled into T-bills, what it meant was that for a while, the Western consumer enjoyed low inflation, low interest rates, high quality goods at affordable rates, but actually were consuming beyond what they were producing. We should not be surprised that this system based on imbalance was not sustainable.

If you imagine that America shuts its market to the productive capacity of China and the EU follows suit – think of automotives as an example – then the question will be whether China will be able to expand its domestic consumption to match its capacity, or if it will still try to export its way out. If it does, where will it export to?

Stephanie Flanders: That is what they have been doing.

Minister: I am saying, without being pejorative or making value judgments, ask yourself – do you need domestic changes to the economic structure of China? I think we do. What do Southeast Asia, Africa and South America want? Do we need infrastructure? We do. Is the productive capacity of China for the development of that infrastructure, particularly green energy, AI and even biotech? Speaking as a doctor, the Chinese are no slouches in that area too. What I am saying is, watch this space. I am sure adjustments will occur, both domestically and across borders. The opportunity will be to try to catch these waves, catch these new tides and winds, so that we maximise opportunities for the rest of us.

I come back to the hopeful note in which you started. Not all of us have lost our heads and reacted in panic or even acted on a sense of retribution. We have tried to take a longer-term view of the imbalances and of the trends and to seek opportunities in these interregnums.

Stephanie Flanders: Well, I think for 60 years, Singapore has been fairly good at that.

Minister: Yes, but 60 years in Asia is far too early to tell. We never take our survival for granted.

Stephanie Flanders: Dr Balakrishnan, thank you so much for joining us and for starting us off on a hopeful footing.

Minister: I hope so. So do not lose your head. Understand what is going on. Look for opportunities – there are opportunities. Thank you all very much.

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